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All this talk of their failing business model reminded me of something. It's not that the model is failing so much as a lack of vision to develop a new model.Sears was started in the 1890's as a mail order business to compete against local general stores (think of all those westerns with "General Store" on one of the buildings - they were Sears competition). The guys Sears worked on railroads, and he saw all the middlemen tacking on markup as products moved west in the distribution chain until they go to the stores.So he started a catalog, the famous Sears catalog in 1893. It was 300 pages, and had everything. Now think about this for a second. In 1893, you had a mail order catalog that sold pretty much everything that was for sale in 1893 - machinery, bikes, toys, dry goods, etc. Does this sound like another business you know?So every year the catalog comes out, and after a few decades it becomes an American institution. For much of the population, the Sears catalog includes a decent quality, low cost version of every mass market nonperishable consumer product in the United States that wasn't a car (they did sell those at one point very early on. They also sold mobile homes too, up to the 1940's). You could pick anything from the catalog, mail in your order with a check, and in a few days/weeks you'd get it. If you didn't like it, for any reason, Sears had a "satisfaction guaranteed" policy that you could return it at anytime for a full refund.Now pay attention, because here's where it gets good.In 1931, Sears starts an insurance company - Allstate. It buys financial investment firm Dean Witter and real estate broker Coldwell Banker in 1981. In 1984 it starts a joint venture with IBM called Prodigy, an online computer service, sort of a prototype AOL. In 1985, Sears launches a new major credit card, the Discover card. For the next eight years, the only credit card you can use at Sears is Discover.At this time, the early 80's Sears is the largest retailer in the U.S. By 1993, the 100th anniversary of the Sears Catalog, Sears had built up considerable goodwill in the mind of consumers. They weren't the lowest price, but they had what you needed at good prices and the service was second to none. They had real estate, insurance, financial planning, and all at good prices with top customer service.This is 1993. In quite possibly the greatest example of corporate shortsightedness, Sears shut down it's mail-order business in a cost cutting measure. It spins off Allstate that same year, and soon dumps Dean Witter and Coldwell Banker.In 1993, Sears had the most extensive and sophisticated mail-order retail operation on the planet and they closed it.Two years later, Amazon.com launched, and was soon selling everything that sears sold through it's catalog. By the late-90's Walmart's push of low-cost China imports killed Sears retailing. Online banking takes off. Credit card use surges as mail order and retail purchases are shifted online.Sears had its own computer network in 1993. They had access to IBM, they should have understood the power of the internet. All they had to do was shift the catalog online instead of killing it off, promising in store returns and the same Sears satisfaction guaranteed. Discover could have been the credit card of choice for security and protection online. Dean Witter could have been what Schwab, E-Trade and Ameritrade became. Back in the mid-late 90s when many people were hesitant to use credit cards online, Sears could have been a familiar face online.Sears could have used the Catalog to create searscatalog.com or wishbook.com and owned online retailing, owned amazon's business, owned online brokerage and banking, but they blew their chances to save a few bucks in 1993. They could have made huge profits in the early 2000s real estate boom by leveraging that success with their real estate arm (imagine if Amazon sold houses).By my estimates, Sears could have spent about $200 million in 1994-1996 to develop and promote retailing and financial services online, and they'd be reaping billions.Sears could still be a huge American company today, instead of a historical footnote.